United States District Court, N.D. Illinois, Eastern Division
ARTUR A. NISTRA, on behalf of The Bradford Hammacher Group, Inc. Employee Stock Ownership Plan and a class of all others similarly situated, Plaintiff,
RELIANCE TRUST COMPANY, Defendant.
MEMORANDUM OPINION AND ORDER
behalf of The Bradford Hammacher Group, Inc. Employee Stock
Ownership Plan, Artur Nistra brings this putative class
action under the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. § 1001 et
seq., alleging that Reliance Trust Company, as Plan
trustee, breached its fiduciary duties to the Plan by causing
it to engage in transactions prohibited by ERISA. Doc. 140.
Nistra has moved to certify a class of Plan participants
under Federal Rule of Civil Procedure 23. Doc. 90. The motion
Bradford Hammacher Group, Inc. is a closely held corporation
with headquarters in Illinois. Doc. 140 at ¶¶ 6-7.
Bradford established the Plan in 2013 and appointed Reliance
as trustee. Id. at ¶¶ 8, 17. Nistra and
753 others are participants in the Plan. Id. at
¶¶ 32, 55. At some point after the Plan was
established, shareholders of Bradford and its affiliates
redeemed 100 percent of their common stock for $275 million.
Id. at ¶ 22. Bradford then issued 600, 000 new
shares of Class A common stock and sold them all to the Plan
in exchange for a $100, 000, 000 note. Id. at ¶
alleges that Reliance violated its fiduciary duties to the
Plan by causing it to borrow money from Bradford and to
purchase Bradford stock at less than fair market value, and
by acting for the benefit of Bradford in connection with the
transaction. Id. at ¶¶ 41-46 (citing 29
U.S.C. § 1106(a)(1)(B), (a)(1)(E), (b)(2), (b)(3)).
Nistra seeks relief under 29 U.S.C. § 1109(a), which
“imposes personal liability on the fiduciary whose
breach of the obligations imposed by the statute results in a
loss to the plan.” Kenseth v. Dean Health Plan,
Inc., 610 F.3d 452, 481 (7th Cir. 2010). “Pursuant
to [29 U.S.C. §] 1132(a)(2), a plan participant or
beneficiary” such as Nistra “may commence a civil
action for appropriate relief under section 1109(a), but she
may do so only in a representative capacity on behalf of the
plan, not in her own behalf.” Id. at 481-82.
seeks relief on behalf of the Plan, and moves to certify this
All persons who were participants in The Bradford Hammacher
Group, Inc. Employee Stock Ownership Plan. Excluded from the
Plaintiff Class are the officers and directors of The
Bradford Hammacher Group, Inc. and legal representatives,
successors, and assigns of any such excluded persons. Also
excluded from the Plaintiff Class are those individuals,
trusts and their family members that redeemed or sold their
shares in the Bradford Group and its affiliates and/or
Hammacher, Schlemmer & Company, Inc. to Bradford in 2013.
Doc. 140 at ¶ 54.
court's analysis of class certification “is not
free-form, but rather has been carefully scripted by the
Federal Rules of Civil Procedure.” Chi. Teachers
Union, Local No. 1. v. Bd. of Educ., 797 F.3d 426, 433
(7th Cir. 2015). To be certified, a proposed class must
satisfy the four requirements of Rule 23(a): “(1) the
class is so numerous that joinder of all members is
impracticable; (2) there are questions of law or fact common
to the class; (3) the claims or defenses of the
representative parties are typical of the claims and defenses
of the class; and (4) the representative parties will fairly
and adequately protect the interests of the class.”
Fed.R.Civ.P. 23(a); see Bell v. PNC Bank, N.A., 800
F.3d 360, 373 (7th Cir. 2015). If Rule 23(a) is satisfied,
the proposed class must fall within one of the three
categories in Rule 23(b), which the Seventh Circuit has
described as: “(1) a mandatory class action (either
because of the risk of incompatible standards for the party
opposing the class or because of the risk that the class
adjudication would, as a practical matter, either dispose of
the claims of non-parties or substantially impair their
interests), (2) an action seeking final injunctive or
declaratory relief, or (3) a case in which the common
questions predominate and class treatment is superior.”
Spano v. Boeing Co., 633 F.3d 574, 583 (7th Cir.
2011); see also Bell, 800 F.3d at 373. Finally, the
class must be “identifiable as a class, ” meaning
that the “class definition must be definite enough
that the class can be ascertained.” Oshana v.
Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006);
see also Mullins v. Direct Dig., LLC, 795 F.3d 654,
659-61 (7th Cir. 2015).
bears the burden of showing that each requirement is
satisfied. See Chi. Teachers Union, 797 F.3d at 433;
Messner v. Northshore Univ. HealthSys., 669 F.3d
802, 811 (7th Cir. 2012). As the Seventh Circuit has
explained, “a district court must make whatever factual
and legal inquiries are necessary to ensure that requirements
for class certification are satisfied before deciding whether
a class should be certified, even if those considerations
overlap the merits of the case.” Am. Honda Motor
Co. v. Allen, 600 F.3d 813, 815 (7th Cir. 2010); see
also Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d
883, 889-90 & n.6 (7th Cir. 2011). The Seventh Circuit
has instructed district courts to exercise
“caution” before certifying a class.
Thorogood v. Sears, Roebuck & Co., 547 F.3d 742,
746 (7th Cir. 2008). That caution demands a close look at
each Rule 23 requirement, even where, as here, the defendant
does not contest most of them.
ascertainable class is “defined clearly and based on
objective criteria.” Mullins, 795 F.3d at 659.
“Class definitions have failed this requirement when
they were too vague or subjective, or when class membership
was defined in terms of success on the merits (so-called
‘fail-safe' classes).” Id. at 657.
Nistra's proposed class is easily ascertainable because
it is based on clear, objective criteria-all Plan
participants except for Bradford's officers and directors
(and their legal representatives) and those participants who
redeemed Bradford stock in 2013.